The Chip Insider®– Chip Wars: The Fallacy of National Silicon Self-Sufficiency

As you know, for over ten years the world has been deglobalizing its supply chains in an attempt to re-globalize manufacturing… Russ Roberts distilled the perils of this path to "self-sufficiency is the road to poverty”… Thinking of it on a personal level, if you tried to do everything yourself you could never make the money you make in your career area of specialization… Expand this to the international scale and you can understand why the liberal international rules-based order has been so successful…

Look at the results: The Cold War emerges out of WWII. Out of this comes two orders: First there are the Marxist-Leninist orders of the PRC and the Soviet Union focused on self-sufficiency. Second there is the market-based order of the West. At the start of 1945, Europe and Japan are wastelands of destruction. The US and Soviet Union are the dominant economies. By the 1980s, Europe and Japan are rebuilt … each with larger economies than the Soviet Union and China. By the 90s, China joins the World’s market-based order, while the Soviet Union collapsed…

Look at semiconductors: In the 1970s China’s semiconductor industry was four years behind the West’s. It was non-existent in Taiwan and South Korea. Today, these two countries are the most advanced in semiconductor manufacturing… returning to lithography, of all the chip equipment companies ASML … One important lesson here is that while we may need to re-globalize chip manufacturing, we should not attempt to re-globalize semiconductor technology..

Hurricane Helene and the great quartz shortage averted: As predicted here, the actual impact on semiconductor markets has been virtually non-existent. TechInsights' Chip Price Performance Index slipped, which indicates chip supply chain managers were still more worried about Fed rate cuts signaling a slowing economy than a quartz shortage. As for Spruce Pine, efforts have conditions well on their way to recovery… As of yesterday… Sibelco’s high-purity quartz manufacturing plant was up and running and the first shipments had left the facility... Sibelco is donating $1M to establish a foundation for ongoing Spruce Pine community support. If you’d like to help, here’s more information: Sibelco Spruce Pine Foundation

“The only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance” — Franklin D. Roosevelt’s 1933 inaugural address